Mixed Bag for Construction

Last year ended as a mixed bag as nonresidential fixed investment increased 2.9 percent from the third quarter to the fourth quarter of 2009, according to the January 29 gross domestic product (GDP) report by the U.S. Commerce Department. The increase was led largely by a 13.3 percent gain in equipment and software spending. However, investment in nonresidential structures declined 15.4 percent following an 18.4 percent loss in the third quarter.

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State Personal Income

State Personal Income

State personal income growth averaged 0.3 percent in the third quarter of 2009 with 19 states seeing net earnings growth for the first time in at least a year, according to estimates released today by the U.S. Bureau of Economic Analysis. Personal income growth rates ranged from 0.8 percent in Alaska to -0.4 percent in Louisiana.

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Occupational Licensing On Upward Trend

Occupational licensing is on the rise.

Two economists have done research that shows that the trend in the US toward requiring a license in order to make a living performing certain skills or providing certain services has increased by six fold over the past fifty-plus years.

Morris Kleiner, a visiting scholar for the Minneapolis Federal Reserve, and Princeton University’s Alan Krueger found that licensing by government rose from less than 5 percent of the U.S. workforce who were licensed by state government in the early 1950s, to approximately 29 percent who were licensed by all levels of government in 2008.

After examining the dynamics of the trend, Kleiner and Kruger concluded, “..the results provide support for the idea that occupational licensing is a means of achieving a monopoly in order to raise wages for those who belong to the occupation.” The data suggests that being “licensed” generates a wage premium of about 14 percent, not unlike union membership, which they discovered has a close parallel to licensing requirements.

Kleiner and Krueger found that 45 percent of union members hold a license compared with 24 percent of nonunion members—due in part to the prevalence of nurses and teachers, occupations with a high percentage of individuals who are both unionized and licensed.

Licensing, they found, is more common for those who provide services than for those who manufacture things (31 percent versus 11 percent).

Licensing also rises with education: More than 44 percent of post-college-educated workers are required to hold a license, compared with 15 percent of those with less than a high school education. Those with college degrees are about as likely to hold a license (29 percent) as the national average.

The economists conceded that the results of their research could change given more data with which to work, and they called upon statistical agencies to regularly monitor the extent of occupational licensing in order to provide more complete data. It would help, they said in answering such questions as: “How much regulation is optimal for productivity growth? Does occupational licensing lead to better consumer protection and higher quality? … And what is the interaction between licensing and unionization?”




ICBA Recommendations On Lending to Small Businesses

The Independent Community Bankers of America (ICBA) told the Financial Crisis Inquiry Commission that too-big-to-fail institutions and shadow banks were the root cause of the financial crisis and that our nation’s more than 8,000 community banks are still meeting the credit needs of their communities and helping in the nation’s economic recovery. ICBA also made recommendations to help community banks continue to lend to the increasingly important small-business sector.

Read more: ICBA Recommendations On Lending to Small Businesses

Manufacturers’ Association Dismayed About Looming Costs

Manufacturers’ Association Dismayed About Looming Costs

As the Senate moved to end debate and vote on Majority Leader Harry Reid’s (D-NV) Patient Protection and Affordable Care Act, National Association of Manufacturers (NAM) President John Engler issued the following statement in opposition to the bill:

We are truly dismayed to see health care legislation advancing in the Senate that does nothing to contain costs for America’s manufacturers and job creators.  This bill raises costs for manufacturers at a time they can’t afford it.  Our members are going to be the spark plug for economic recovery but with this bill they will be burdened with new taxes and other limitations. 

Read more: Manufacturers’ Association Dismayed About Looming Costs

Homes With Cell Phones Nearly Double in First Half of Decade

The number of households with cell phones increased from 36 percent to 71 percent between 1998 and 2005, according to new data released by the U.S. Census Bureau. This corresponded with a decrease in households with telephone landlines, particularly households headed by young adults.

These figures are part of an in-depth look at the living standards of U.S. households using extended measures of well-being. The data were collected in 2005 as part of the ongoing Survey of Income and Program Participation. The survey is unique because it allows the user to track select quality of life measures over time using a variety of demographic characteristics.

“While income is generally regarded as the best single measure of one’s living standard, it doesn’t give us the whole picture,” said Tiffany Julian, an analyst in the Census Bureau’s Housing and Household Economic Statistics Division. “This survey is unique in that it includes additional measures of well-being that give us a broader look at household living conditions.”

Householders who were 29 or younger went from 35 percent with cell phones in 1998 to 81 percent in 2005. Over the same period, this same group saw a decrease in ownership of landline phones from 93 percent to 71 percent.

Landline phone ownership fell from 96 percent to 91 percent overall from 1998 to 2005. In 2005, 98 percent of householders who were

65 and over had a landline telephone.

The number of households with a personal computer increased from 42 percent to 67 percent between 1998 and 2005. Those who were least likely to own a computer in 2005 were the elderly, those in poverty and those without a high school diploma.

Among the indicators in this survey that measure quality of life are possession of appliances and electronic goods, housing conditions, neighborhood conditions, public services and the ability to meet basic needs, such as paying bills, avoiding foreclosure and having sufficient food.

Other statistics:

— In 2005, 92 percent of householders felt their neighborhoods were safe; 96 percent were satisfied with public services such as fire and police protection.

— Eighty-six percent of households reported being able to keep up-to-date on overall essential expenses.

— Households that paid either rent or a mortgage were generally up to date on their payments — 94 percent.

 Ninety percent of households responded that they were able to pay their utility bills.

— Households in poverty were more likely to have trouble paying bills;       35 percent had unmet bills.

— Among all households, 96 percent reported having a microwave oven.

— Ninety-five percent of households said they had no roof or ceiling leaks; 97 percent reported no broken windows.




Who are Top Financial Leaders?

Who are Top Financial Leaders?

Multi-billionaire investor Warren Buffett was named most often by respondents to a survey of financial practitioners and businessmen asking who they thought were the top financial leaders and thinkers of all time. More than 50% of respondents included Buffett among their top-five choices. Adam Smith, considered by many to be the father of modern economics, received the next highest total of top-five votes with 37 percent of respondents including him in their short list. He was followed by John Maynard Keynes at 36%. Contemporaries J.P. Morgan and John D. Rockefeller rounded out the top-five with 32% and 25% respectively.

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Survey of Top Economic Thinkers

Multi-billionaire investor Warren Buffett was named most often by respondents to a survey of financial practitioners and businessmen asking who they thought were the top financial leaders and thinkers of all time. More than 50% of respondents included Buffett among their top-five choices. Adam Smith, considered by many to be the father of modern economics, received the next highest total of top-five votes with 37 percent of respondents including him in their short list. He was followed by John Maynard Keynes at 36%. Contemporaries J.P. Morgan and John D. Rockefeller rounded out the top-five with 32% and 25% respectively.

The survey also asked respondents to rate on a scale of 1 to 10 (1 for poor; 10 for excellent) the effectiveness of government regulators to deal with the financial industry crisis. An overwhelming 72% gave government bad marks of 5 or lower with 35% rating regulators effectives a 1 or 2. Only 28% gave government a 6 or better, but not surprisingly, no one said regulators were doing an excellent job.

When asked ‘What is the single most important attribute a leading financial practitioner should possess today?’ more than 19 percent cited “honesty”, “integrity” and/or “ethics.” Other attributes that rated multiple responses included “long-term view,” “skepticism,” “creativity,” “risk management,” and “vision.”

The survey was conducted in conjunction with the launch of QFINANCE: The Ultimate Resource, an unprecedented repository of financial content housed in a 2,200-page reference guide complemented by a free online global knowledge bank (www.qfinance.com).  The book and web site contain essays by the world’s leading economists and financial experts – whose affiliations range from the London School of Economics to Goldman Sachs.

In addition to offering a rich lode of thought leadership and best practices, QFINANCE serves up a glossary of some 9,000 financial terms, along with 100 key finance ratios and pricing techniques, plus capsule summaries of the most seminal financial and business books, and a crib sheet for dozens of prime financial sources, from economic forecasters to government agencies and trade associations.  
Message to Leaders

Survey respondents  -- who included finance professionals at both large and small companies, with nearly half from companies with more than $50 million in revenues-- were also given the chance to tell what message they would give financial community leaders (regulators and executives), in 10 words or less? Among the responses were:

* “Enforce current regulations…do not over-regulate.”
* “Without incentive, there would be no progress.”
* “Stop saying ‘too big to fail.”
* “Get back to basics: risk/reward management.”
* “Manage based on long-term returns to shareholders and society.”
* “Let the markets resolve the issues without interference.”
* “Don’t give/don’t take public money to private companies.”
* “Embrace honesty and integrity; sacrifice reward for the common good.”
* “Teach financial literacy and entrepreneurism.”
* “Don’t be swayed by general public opinion.”
* “Prevention is better than cure!”
* “Diversification, deregulation and talent.”
Profiles of the Top 5 Financial Leaders and Thinkers, as well as several dozen other influential individuals – ranging from originators of financial theory to those who created practical applications for real-life situations – are included in QFINANCE.  Their profiles listed alphabetically in the book and at www.qfinance.com include career summaries as well as an assessment of their contribution to the world of modern finance, and suggestions for further reading.
The Next Five
Following the top-five vote getters were George Soros (22%), Benjamin Graham (22%), Alan Greenspan (16%), Andrew Carnegie (13%), and Jack Welch (10%).  The appearance of Benjamin Graham in the top ten is not surprising considering that Warren Buffett studied under him at Columbia Business School.
Showing that there is room for debate on financial issues, Adam Smith, a free-market proponent received just a few more votes than Keynes who favored intervention and government use of fiscal and monetary measures to mitigate the adverse affects of recessions and booms. In fact, a number of ballots included both Smith and Keynes in the top-five.
Also reflecting the diversity of views on financial thought leadership, there were an additional 70 people that were not profiled in the inaugural edition of QFINANCE who received votes in the survey. Among the notable write-ins who received multiple votes are Milton Friedman, Paul Volcker, Ben Franklin and Alexander Hamilton.
“The Leaders and Thinkers survey shows that there is plenty of room for debate in finance and no one person has all the answers for every situation. Our aim in publishing QFINANCE: The Ultimate Resource is to serve as a reference on the full spectrum of financial topics. We hoped to foster learning as well as a dialogue on important economic ideas among practitioners worldwide - both in print and online,” said Dr. Kathy Rooney, publisher of QFINANCE at Bloomsbury.
A few other interesting tidbits from the survey include:
* The oldest recipient of votes was Sun Tzu, born in 544 BC and author of The Art of War, his writings are considered influential in managing conflicts and planning strategically.
* Another industrialist who scored high overall was Andrew Carnegie. The powerful businessman and investor was named to the top-five by 13% of respondents.
* Two former United States presidents – Ronald Reagan and Theodore Roosevelt – and current US President Obama received votes.
* Several notable technology business gurus garnered votes, including Bill Gates and Steve Jobs.
* No current CEO’s or Chairman of the top banking/financial institutions received any votes.


Dust Up About Dust

A federal regulatory proposal, that is being “fast tracked” to adoption, poses a new threat to the survivability of businesses in Montana, most especially agriculture, according to the Western Business Roundtable (WBRT). The new regulations will reduce the allowable level of dust particles in the air to one-tenth current standards – levels lower than those normally recorded in natural areas, such as Yellowstone National Park.

If the regulations being proposed by the federal Environmental Protection Agency (EPA) are implemented, “It would bring economic development and growth to a halt,” said Jim Sims, President and CEO of WBRT, a coalition of companies and industry associations throughout the western states focused on encouraging investment, growth, and job creation in all economic sectors.

The proposed regulation is based on a “flawed” study, according to Sims, one that broadens the definition of what is considered dust and raises the specter of health concerns. Since health is ostensibly at issue, regulatory solutions are considered “absolute” – in other words, economic impacts or technical feasibilities are not allowed to be considered in deciding whether a regulation should be adopted.

Read more: Dust Up About Dust

Market Update

1 DOW 20,707.86
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2 S&P 2,366.58
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3 NASDAQ 5,907.24
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4 MDU 27.02
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5 SWC 17.30
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6 EBMT 19.95
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7 FIBK 40.08
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8 GBCI 34.07
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